Pennsylvania dealership seeks to buy Iron Town Harley-Davidson

$2.15 million deal still subject to court approval

Iron Town Harley-Davidson dealership
The Iron Town Harley-Davidson dealership in New Berlin

An affiliate of Hannum’s Harley-Davidson in Pennsylvania would buy the assets of Iron Town Harley-Davidson out of bankruptcy for $2.15 million under the terms of an agreement reached last week.

The deal is still subject to court approval and another buyer could still outbid Hannum’s through an auction process.

Hannum’s would also need to either acquire the dealership’s real estate in New Berlin, enter into a new lease for the site or find and move to a new location within the dealership territory.

The Iron Town Harley dealership, previously known as Hal’s Harley-Davidson, is one of two owned by Sara Pomeroy in Wisconsin that shut down this year. The other was Broadtracker Harley-Davidson in Janesville.

The business entities behind the dealerships filed for bankruptcy this summer after Harley-Davidson Credit Corp. sued them for $6.3 million. The lawsuit alleged the dealerships had been selling motorcycles without paying Harley back for financing the purchase of the bike in the first place.

Attorneys for the New Berlin dealership asked a court this week to approve the potential sale to Hannum’s along with bidding procedures, assignment of contracts, cure amounts and other deadlines. The Janesville dealership was not included in the filings.

Hannum’s, which has five dealerships in Pennsylvania and New Jersey, is just the latest potential buyer of the New Berlin dealership. When Harley’s financing arm first sued the dealerships, the owners of Wisconsin Harley-Davidson in Oconomowoc agreed to take over management of the New Berlin store with a plan to eventually buy the dealership. That deal, however, fell apart after the buyers determined the New Berlin dealership required more investment than they were prepared to make.

When the dealerships filed for bankruptcy, both entities listed management agreements with Windy City Harley-Davidson on their court filings.

The latest court filing says the businesses began exploring the potential sale of the dealerships in late 2018 and received interest from a number of buyers just before the bankruptcy filing.

In August, attorneys for Iron Town said the dealership was negotiating with at least two buyers and set a goal of selecting an initial stalking horse bid by Sept. 15, holding an auction by Oct. 15 and closing a transaction by Nov. 15.

The agreement with Hannum’s still targets a Nov. 15 closing but the deadline could be extended to Jan. 15 under certain circumstances.

One potential complication for the deal is an objection from the property owner, an affiliate of Virginia-based Capital Automotive Real Estate Services, to the hiring of a broker for the sale of the dealership and an accounting firm. Capital Automotive also argues the business racked up more than $401,000 in unpaid rent and taxes before filing for bankruptcy and another $198,200 since filing for bankruptcy.

A hearing on a motion to require the payment of at least some of that money is set for Sept. 25.

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Arthur Thomas
Arthur covers manufacturing for BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.